The ratings on Deutsche Bank AG are based on its excellent, diversified investment-banking franchise; a favorable view of management, which has successfully executed its focused growth strategy; and satisfactory performance due to proactive risk management, despite difficult market conditions. The ratings are constrained by the cyclical sensitivity of profitability to capital markets conditions; its significant exposure to deteriorating conditions in the leveraged finance business; and still average earnings levels in parts of its asset- and wealth-management activities. Deutsche Bank's group performance remains satisfactory, with an operating pretax margin of 20% in the very difficult second half of 2007. Favorable trends in transaction banking, retail and private banking, and asset management bolster its capacity to withstand increased volatility and market uncertainty.
